Brazil is known for leading the offshore rig market in South America, home to bountiful presalt fields, but the waters offshore other countries on the continent are also “teeming with excitement,” as a rig analyst described it during a recent webinar.

Chief among these areas is Guyana, where an Exxon Mobil Corp.-led consortium has made 14 discoveries and plans to start producing up to 120,000 barrels of oil per day at the Liza Phase 1 development by early 2020.

“Exxon Mobil will soon have four drillships working full time in Guyana with much of that time dedicated to exploring its huge acreage in the country, and the operator will likely keep at least four floaters there going forward,” Jason Smith, rig analyst for IHS Markit, said on a webinar. “To that end, the likelihood that Exxon Mobil will need more than four rigs in the country increased just a few days ago when the company outlined its development plan for the Payara Field and the surrounding area.”

The 220,000-barrel-per-day Payara development could start up as early 2023, Exxon Mobil has said.

“The company is looking at using two drillships to drill up to 45 wells over five years starting late 2020,” Smith said. “According to the schedule the operator will work to procure the rigs in the first half of next year.”

Exxon Mobil’s partners on the 26,800-sq-km Stabroek Block, where all of the discoveries were made, are Hess Corp. and CNOOC Ltd.

The exploration success story has been among the bright spots of the oil and gas industry, which continues to battle volatile market conditions amid pressure by shareholders to focus more on returns and less on output. It is also helped put the spotlight on offshore exploration, which suffered major budget cuts during the latest market downturn.

While Exxon Mobil and partners have marked the most wins offshore Guyana, hydrocarbon jackpots have also been hit by Tullow Oil with its Joe and Jethro discoveries. Meanwhile, others are gearing up to test the waters, too—Repsol will begin its $60 million exploration campaign this year in the Kanuku Block offshore Guyana.

He added that CGX Energy has contracted Rowan’s Ralph Coffman jackup to drill a prospect in the Corentyne Block.

The company said it plans to carry out a seismic survey on the northern part of the Corentyne Block, adjacent to a block where hydrocarbons been discovered, by Nov. 27 and drill an exploration well. This will be followed in 2020 by a well in the Demerara Block.

Anadarko Petroleum planned drilling on its Roraima Block at some point, Smith said, but it is now unclear when that will happen following the company’s acquisition by Occidental Petroleum Corp.

Suriname: Interest in neighboring Suriname rose with news of the Guyana discoveries, but success has remained elusive so far. “Apache, Tullow Oil, Petronas, Inpex and Kosmos Energy have all failed to find hydrocarbons,” Smith said.

But the explorers are not giving up.

Kosmos plans to drill the large carbonate Walker prospect in Block 42, while Tullow Oil will drill the Goliathberg-Voltzberg prospect in Block 47. Both are scheduled for 2020.

Apache has already began drilling offshore Suriname using the Noble Sam Croft drillship in Block 58, which borders the Stabroek Block.

“Meanwhile, state oil company Staatsolie is in the midst of its second prolonged shallow water drilling campaign this time using Seadrill jackup West Castor,” Smith said. “This job will see up to nine wells being drilled.”

Colombia: Efforts by the Colombian government to revitalize its oil and gas sector—including changes to its contract model and a licensing scheme—are showing positive results, according to Smith. The country is offering 23 blocks, including four offshore, during a bid round underway.

“Meanwhile the ANH [Colombia’s National Hydrocarbons Agency] has also signed a number of contracts for areas that operators had under the old technical evaluation scheme, putting a more reliable exploration schedule in place. New contracts are signed with Ecopetrol, Shell Noble Energy and Repsol with future drilling already outlined for some operators in the country for 2020 including Petrobras, Ecopetrol and Noble Energy.”

Argentina: Having completed its first offshore lease sale earlier this year, Smith said Argentina is looking to become a hotbed of activity. Thirteen companies, including Equinor, Exxon, Shell and Total, placed bids on 18 of the 38 blocks offered.

“All signs point to this being the first of multiple lease sales to come for the country as it makes a big push to court foreign operators,” the analyst said. “However, there are existing fields in southern Argentina that have seen work in recent years and will likely see more in the future.”

Total is among the players, having last used the jackup Noble Houston Tolbert to drill the Vega Pleyade Field and discovered hydrocarbons at the Leo prospect, Smith said.

“The company is also expected to develop its Fenix natural gas field at some point. But economic uncertainty in the country has delayed that,” he added.

Falkland Islands: Harsh waters and its remote location have contributed to a slowdown in exploration and development in the Falkland Islands.

“Premier has repeatedly delayed the development of a Sea Lion oil field for which it is planning to drill 23 wells,” Smith said. “The company signed a letter of intent at the beginning of 2018 to have Diamond Offshore supply a rig for the work and that contract was supposed to be finalized by the end of last year. However, the company has still not sanctioned the development and has extended the Diamond LOI to the end of this year pushing the start of development drilling to late 2021.”

Peru: Karoon Gas Australia is expected to bring a floater program to Peru for the first time in 20 years when it drills an exploration well next year. Working with Total, the company plans to drill in the Tumbes Basin’s offshore Block Z-38. If the company finds success, “it could provide additional running room for similar plays in the area,” Smith said.

However, politics could impact operators’ plans. During a presidential change of command, a contract that Tullow Oil had in place was canceled. The contract was signed by the former president on his last day in office; he was essentially forced to resign to avoid impeachment. The contract was later reapproved.

Plus, just this month, Peruvian President Martín Vizcarra dissolved Congress, which Smith said has attempted to remove the president from office. This came amid Vizcarra’s anti-corruption crusade.

Venezuela: Venezuela’s Lake Maracaibo is the site of most offshore drilling activity nowadays. But the country has suffered economic setbacks in recent years.

“Production declines, sanctions and low oil prices have devastated not only PDVSA but Venezuela at large. Some of the only viable options for the country come from PDVSA’s joint ventures with international oil companies like the aforementioned ENI, Chevron, Equinor, Total and Rosneft,” Smith said. “But not even all of their projects get off the ground in the current market. Meanwhile, in the last year the government has restarted its border dispute with Guyana, having claimed that about half of Guyana’s land and most of its offer territory including Exxon Mobil’s many discoveries belong to Venezuela.”

Elsewhere: In Uruguay, the government hopes to rekindle the interest of operators, including those who left due to the costly nature of operating in the country’s remote waters, Smith said. Its oil and gas regulator launched an open licensing process with different terms.

Only Total remains offshore French Guiana, where a string of dry wells deterred other companies. Smith noted it “appears that drilling offshore French Guiana has come to an end permanently,” considering France—of which French Guiana is a territory—decided not to grant new oil and gas licenses in 2017.

“As for the final two countries with a coastline in South America there is not a whole lot to say,” Smith added. There has been no drilling offshore Chile since 1992 and Ecuador’s national oil company Petroecuador abandoned plans to further develop the Amistad Field after looking for partners, “although it will likely try again in the next couple of years.”

COMING NEXT WEEK: Brazil

 

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